1) The amount of money earned by an investment of principal P with an (annual) interest rate of r with
interest compute continuously is given by P ert where t is the investment in years. In the following, all
amounts are invested in accounts where interest is compounded continuously.

(a) (15 pts) Assume that Alice invests $50000 at an interest rate of 5%. Create a table
that lists her income for t = 1, 2, . . . 5

(b) (15 pts) Bob has $40000 to invest. He invests this in an account with an interest rate of 2.5% that
gives a bonus of $500 at the end of every year. Create a table that lists his income
for t = 1, 2, . . . 5.

(c) (20 pts) At the end of 5 years, who has more money, Alice or Bob? What about at the end of 10
years and 15 years?

Answer rating: 100% (QA)

a Alices investment Principal P 50000 Interest rate r 5 005 Using the formula P ert we can calculate ... View the full answer